By Mackenzie Tatananni

Shares of CarMax tumbled in premarket trading Thursday after the used-car dealer reported fiscal-fourth-quarter earnings that missed expectations.

CarMax reported earnings of 58 cents a share for the quarter ended Feb. 28, below the 66 cents analysts anticipated, according to FactSet. Net revenue increased 6.7% from a year ago to $6 billion, roughly in line with Wall Street forecasts.

Used-vehicle sales rose 7.5% to $4.84 billion in the quarter, missing analysts' calls for $4.87 billion. The company noted that retail used-unit sales increased 6.2%, while comparable-store used-unit sales rose 5.1% and wholesale units rose 3.1%.

CarMax stock slid 7.6% to $74 in premarket trading. It closed up 9.2% on Wednesday. Shares of rivals Carvana and AutoNation fell 4.6% and 2.2%, respectively, in premarket trading.

The market rallied on Wednesday after President Donald Trump delayed tariffs on most countries for 90 days. However, the president doubled down on his levies on Chinese imports, raising the rate to 125%.

Certain tariffs remained in place, such as the 25% tax on automotive imports that went into effect at the end of March. The tariff will expand to imported car parts starting on May 3, making it more expensive to assemble vehicles in the U.S.. Automakers including Audi, Volkswagen, and Jaguar Land Rover already have begun to halt shipments to avoid paying the levies.

CarMax and peers are positioned to capitalize in this environment. As a used-car dealer, CarMax is largely insulated from the effects of tariffs targeting shipments of new models. However, that doesn't mean it's completely immune. As delays of auto imports will make used cars more readily available, the resulting demand could cause prices to rise.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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April 10, 2025 07:42 ET (11:42 GMT)

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